News Release

PGI Supports the Railroad Competition Act of 2005

BLACKFOOT, ID — The Potato Growers of Idaho Executive Committee voted unanimously to support the Railroad Competition Act of 2005. This vote represents a departure from a long-standing policy, which recognized some degree of satisfaction with the railroad industry. This change of position is not unfounded.

In the past several years Union Pacific has shown both inability and unwillingness to work with potato shippers. Despite increasing rates, their system has seen only minimal growth. This is because there is no competition forcing them to improve. With even a minimal increase in demand, their system is overloaded. Rather than grow and improve with the demand, they simply raise rates in order to lower demand to a point that they can handle.

Idaho’s shippers, held captive by the lack of competition, are forced to either truck their goods across the country (relatively expensive), or to use a rail system with increasing rates, but decreasing reliability. The premium potato of Idaho no longer brings the premium dollar. Growers in the mid-west are close to the U.S. market, and those on the west coast have access to seaports, and thus the international market. Idaho growers have neither, and therefore spend their would-be revenue on shipping.

A competitive railroad system would help solve this problem. Unfortunately this competition will not simply appear, as evidenced by rail history. PGI recognizes the need for government to impose competitive rules, which are set out in the Railroad Competition Act, on the railroad providers.

However, it would be meaningless to impose new rules on the railroad without providing the means to realize those expectations. That is why the Railroad Competition Act would increase ten-fold the existing Railroad Rehabilitation & Improvement Financing (RRIF) program. The RRIF program provides loans and loan guarantees to firms to improve freight rail infrastructure. The funds can be used to buy, improve and rebuild existing equipment, facilities, track, bridges, yards, etc.; it may also be used to build new facilities or to refinance outstanding debt already incurred for all of these purposes.

PGI supports the Railroad Competition Act of 2005, which will require railroads to quote rates to their customers, provide arbitration for rail user/provider disputes and offer special rail customer remedies in areas deemed to have inadequate rail competition. Idaho’s rail users and providers both will benefit from this legislation.